Federal Judge Halts Rhode Island Cannabis License Lottery Over Residency Rule Challenge

A federal judge has issued a preliminary injunction stopping Rhode Island’s long-anticipated cannabis retail license lottery, leaving nearly 100 applicants in uncertainty. The injunction, handed down by U.S. District Court Judge Melissa DuBose, blocks the state’s Cannabis Control Commission (CCC) from moving forward with its planned lottery and from reviewing or screening new retail license applications. This legal action comes amid three federal lawsuits filed by out-of-state entrepreneurs challenging the state’s residency requirement, which mandates that at least 51 percent of a cannabis company be owned by Rhode Island residents

Applicants and industry stakeholders have expressed deep frustration over the sudden halt, especially after months of preparation and financial investment. Jason Calderon, a cultivator seeking a license in North Kingstown, voiced his disappointment: “This most certainly could have been avoided. All we’ve done now is give more time to the existing monopolies to be a monopoly.” Attorney Allan Fung, representing several applicants, echoed these concerns, stating, “It’s frustrating that the state didn’t fix the statute and settle these issues earlier on, or find a compromise with these three plaintiffs, before people put their life savings on the line.”

The legal dispute began in May 2024 when California entrepreneur Justyna Jensen sued the CCC, arguing that Rhode Island’s residency requirement violates interstate commerce protections. Two additional lawsuits were filed by out-of-state plaintiffs, neither of whom had applied for Rhode Island licenses but argued that the law unfairly excluded them. The 2022 Rhode Island Cannabis Act had set aside 24 retail licenses, with specific allocations for social equity and worker-owned cooperatives, but the residency restriction became a focal point of contention. Although the state allows some out-of-state ownership, it requires a majority stake to be held by local residents

Despite earlier dismissals, the U.S. 1st Circuit Court of Appeals revived the lawsuits last November, instructing Judge DuBose to address the merits before licenses could be awarded. In her ruling, DuBose concluded that the residency rule was not narrowly tailored to serve legitimate state interests and that plaintiffs could suffer irreparable harm, especially since regulators had acknowledged no additional licenses would be issued beyond the statutory cap. She criticized the state’s approach, writing, “Knowing the Act was facing legal challenges in this Court, the CCC continued forward with its plan to implement the Act and its licensing scheme. The resulting fall-out will be, to be blunt, self-inflicted.”

The licensing freeze has intensified financial pressures on applicants, many of whom have been paying rent and securing zoning approvals for months in anticipation of the lottery. Community advocates like Andre Dev, founder of the Community Cannabis Network of Rhode Island, praised applicants’ readiness but lamented that the court sided with plaintiffs who had not even applied in the state. “Somehow their rights are more important than us who put in the time and effort to get all this done,” Dev remarked, urging the commission to act quickly to minimize harm to local businesses

From the OG Lab newsroom perspective, this development highlights the ongoing tension between state-level cannabis regulations and federal constitutional principles, particularly regarding interstate commerce. Rhode Island’s situation underscores the importance of crafting legislation that balances local interests with broader legal standards. As state lawmakers consider bills to remove the residency requirement and the CCC prepares for its next meeting, the industry will be watching closely to see whether regulators can resolve the impasse and finally open the door for new cannabis retailers